Gold climbs, but ends the week lower

SAN FRANCISCO (CBS.MW) -- Gold futures gained ground Friday, but closed out the week down more than $1 an ounce with near-term movement still dictated by the currency markets.

Gold for April delivery closed at $396.80 an ounce on the New York Mercantile Exchange, up $1.30 for the session, but down $1.20 for the week.

Still, Thursday's rebound by gold futures of more than $4 off the lows has the "earmarks of bargain-hunting physical demand out of Asia," said Brien Lundin, editor of Gold Newsletter.

"Physical demand from Asian investors and savers, in combination with de-hedging by producers, has come in to support the gold price on every significant setback during this bull-run," he said.

Lundin warned that volatility would continue for some time, "as gold works through a painful transition from a dollar-based bull market to multi-currency advance."

But this is "the first true gold bull market in the age of hyper-liquid capital, in which even small investors can easily and efficiently switch among the world's major currencies and investment sectors," he said.

Lundin said he's "confident that gold will emerge as a popular hedge against not just the dollar, but against every currency jockeying for the trade advantages that come with lower relative values."

That, however, "will take some time, and prices will remain on a roller coaster until then," he said.

Dollar moves fuel rough week

The dollar weakened a bit against the euro and yen Friday, after earlier showing steady gains on the potential for an interest rate cut in Europe. See Currencies Report.

"Gold has had a pretty rough week as an unexpected pop in the dollar took some of the air out of the yellow metal's sails," said Grady Garrett, chief trading strategist at EnergyTrendAlert.com, a commodity information provider.

"Profit takers also moved in as global market participants pulled back as they waited for some clarity in the foreign exchange markets," he said.

All in all, the gold market is "at the most critical point in years," said Peter Grandich, editor of investment publication The Grandich Letter.

He said the deciding factor for bulls will be whether gold can move back above $400. Meanwhile, the market bears continue to "toss multiple salvos of calls for a lower euro, yen and will likely toss the kitchen sink (talk of central bank sales) before it's all over," he said.

Copper, silver pull back

Also on Nymex, copper and silver futures pulled back Friday after climbing 3 percent in the previous session.

May copper closed at $1.346 per pound, down 0.8 cent. May silver closed down 1.5 cents at $6.715 an ounce.

Supplies of copper fell another 1,611 short tons to 242,703 short tons as of late Thursday, according to Nymex. Silver stocks were down 220,822 troy ounces at 123.7 million troy ounces.

Gold inventories stood at 3.48 million troy ounces, unchanged from the previous session.

Platinum and palladium futures ended higher. April platinum rose by $20 to close at $887.40 an ounce, while its sister metal, June palladium, tacked on $3.25 to close at $232.65 an ounce.

Mining shares up for a second session

Over in the equities market, metals mining shares closed higher for a second session, and key sector indexes finished higher on the week.

Tracking the mining sector as a whole, the Philadelphia Gold and Silver Index
XAU, -1.30%
rose by 0.7 percent to close at 99.8, and the CBOE Gold Index
GOX, -0.56%
closed at 85.79, up 0.4 percent. The indexes were up more than 2 percent for the week.

But shares of Placer Dome Gold
PDG, +1.73%
fell 7 cents to close at 16.92. The Vancouver-based miner reported earnings of 15 cents a share -- 3 cents above the average analyst target of 12 cents, according to Reuters Research.

Gold production in the fourth quarter was 1.04 million ounces, marking the highest quarterly production in the company's history. However, the company also said that reserves and resources at its South Deep mine may be reduced. See full story.

One of the biggest losers in the mining sector Friday was Stillwater Mining; shares fell as much as 16 percent. The platinum and palladium miner said Friday that a hefty asset impairment charge forced it to report a wider fourth-quarter net loss.

Columbus, Mont.-based Stillwater
SWC, -0.17%
also said it has appointed Gregory Wing, a former chief financial officer of Black Beauty Coal Co., as vice president and CFO.

The stock closed at $12.14, down 55 cents, or 4.3 percent, after earlier falling to an intraday low of $10.70. See full story.

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